1. Copyright 2008 The McGraw-Hill Companies 30-1 Antitrust Policy Policy Issues and Impacts Effectiveness of Antitrust Laws Industrial Regulations Social Regulation Last Word Key Terms End Show 30 Antitrust Policy and Regulation

2. Copyright 2008 The McGraw-Hill Companies 30-2 Antitrust Policy Policy Issues and Impacts Effectiveness of Antitrust Laws Industrial Regulations Social Regulation Last Word Key Terms End Show Chapter Objectives The Core Elements of the Major Antitrust (Antimonopoly) Laws in the United States Some of the Key Issues Relating to the Interpretation and Application of Antitrust Laws The Economic Principles and Difficulties Related to the Setting of Prices (Rates) Charged by So- Called Natural Monopolies The Nature of Social Regulation, Its Benefits and Costs, and Its Optimal Level

3. Copyright 2008 The McGraw-Hill Companies 30-3 Antitrust Policy Policy Issues and Impacts Effectiveness of Antitrust Laws Industrial Regulations Social Regulation Last Word Key Terms End Show Antitrust Policy The Antitrust Laws –Historical Background –Regulatory Agencies –Sherman Act of 1890 –Clayton Act of 1914 Price Discrimination Tying Contracts Interlocking Directorates

4. Copyright 2008 The McGraw-Hill Companies 30-4 Antitrust Policy Policy Issues and Impacts Effectiveness of Antitrust Laws Industrial Regulations Social Regulation Last Word Key Terms End Show Antitrust Policy The Antitrust Laws –Federal Trade Commission Act of 1914 Cease and Desist Orders Wheeler-Lea Act 1938 –Deceptive Acts or Practices Celler-Kefauver Act 1950 –Merger Regulation

5. Copyright 2008 The McGraw-Hill Companies 30-5 Antitrust Policy Policy Issues and Impacts Effectiveness of Antitrust Laws Industrial Regulations Social Regulation Last Word Key Terms End Show Policy Issues and Impacts Issues of Interpretation –Focus on Monopoly Behavior or Structure 1911 Standard Oil Case 1920 U.S. Steel Case –Rule of Reason 1945 Alcoa Case –How Broadly Should Markets be Defined? 1956 DuPont Cellophane Case Issues of Enforcement

6. Copyright 2008 The McGraw-Hill Companies 30-6 Antitrust Policy Policy Issues and Impacts Effectiveness of Antitrust Laws Industrial Regulations Social Regulation Last Word Key Terms End Show Effectiveness of Antitrust Laws Monopoly –Microsoft Case Mergers –Merger Types Horizontal Merger Vertical Merger Conglomerate Merger O 30.1

7. Copyright 2008 The McGraw-Hill Companies 30-7 Antitrust Policy Policy Issues and Impacts Effectiveness of Antitrust Laws Industrial Regulations Social Regulation Last Word Key Terms End Show Effectiveness of Antitrust Laws Automobiles Blue Jeans Types of Mergers Autos Glass Blue Jeans Denim Fabric A C BD EF Z Y X W VU T Horizontal Merger Conglomerate Merger Vertical Merger

8. Copyright 2008 The McGraw-Hill Companies 30-8 Antitrust Policy Policy Issues and Impacts Effectiveness of Antitrust Laws Industrial Regulations Social Regulation Last Word Key Terms End Show Effectiveness of Antitrust Laws Merger Guidelines –The Herfindahl Index –Price Fixing Per Se Violations –Price Discrimination –Tying Contracts

9. Copyright 2008 The McGraw-Hill Companies 30-9 Antitrust Policy Policy Issues and Impacts Effectiveness of Antitrust Laws Industrial Regulations Social Regulation Last Word Key Terms End Show Industrial Regulation Natural Monopoly –Public Ownership –Public Regulation –Public Interest Theory of Regulation Problems With Industrial Regulation –Costs and Inefficiency –Perpetuating Monopoly –Legal Cartel Theory Deregulation

10. Copyright 2008 The McGraw-Hill Companies 30-10 Antitrust Policy Policy Issues and Impacts Effectiveness of Antitrust Laws Industrial Regulations Social Regulation Last Word Key Terms End Show Social Regulation Distinguishing Features –Food and Drug Administration 1906 –Equal Employment Opportunity Commission 1964 –Occupational Safety and Health Administration 1971 –Environmental Protection Agency 1972 –Consumer Product Safety Commission 1972

11. Copyright 2008 The McGraw-Hill Companies 30-11 Antitrust Policy Policy Issues and Impacts Effectiveness of Antitrust Laws Industrial Regulations Social Regulation Last Word Key Terms End Show Social Regulation Optimal Level of Social Regulation –In Support of Social Regulation –Criticisms of Social Regulation –Two Reminders There is No Free Lunch Less Government is Not Always Better than More

12. Copyright 2008 The McGraw-Hill Companies 30-12 Antitrust Policy Policy Issues and Impacts Effectiveness of Antitrust Laws Industrial Regulations Social Regulation Last Word Key Terms End Show United States v. Microsoft Charges May 1998 Windows Monopoly District Court Findings –95% of Intel PCs –Restrictive Contracts –District Court Remedy Appeals Court Ruling Final Settlement –No Break Up Last Word

13. Copyright 2008 The McGraw-Hill Companies 30-13 Antitrust Policy Policy Issues and Impacts Effectiveness of Antitrust Laws Industrial Regulations Social Regulation Last Word Key Terms End Show Key Terms antitrust policy industrial regulation social regulation Sherman Act Clayton Act tying contracts interlocking directoratesinterlocking directorates Federal Trade Commission ActFederal Trade Commission Act cease-and-desist order Wheeler-Lea Act Celler - Kefauver Act Standard Oil case U.S. Steel case rule of reason Alcoa case DuPont cellophane case Microsoft case horizontal merger vertical merger conglomerate merger per se violations natural monopoly public interest theory of regulationpublic interest theory of regulation legal cartel theory of regulationlegal cartel theory of regulation

14. Copyright 2008 The McGraw-Hill Companies 30-14 Antitrust Policy Policy Issues and Impacts Effectiveness of Antitrust Laws Industrial Regulations Social Regulation Last Word Key Terms End Show Next Chapter Preview… Agriculture: Economics and Policy